U.S. Outlook: Replacing liftoff with gradual levitation
Chief Economist
The word “liftoff” brings visions of a rocket on the launch pad ready to vault into space. But recent downward revisions to our growth outlook suggest a far calmer interest-rate normalization approach.
While I still believe the FOMC will raise interest rates for the first time in December 2015, I expect long pauses before each successive move upward.
For more on this and other economic developments this week, see my full report. Highlights are outlined below, followed by a link to the full U.S. Outlook report, delivered on Oct 9.
Key observations:- We are penciling in three more small interest-rate hikes in 2016.
- For the U.S. we expect the push and pull from relatively robust consumer spending and housing demand to be nearly equally balanced by relative weakness in business spending, industrial production, exports, and business inventories in the quarters ahead.
- The rate outlook bodes well for home buyers.
